U.S. bank regulator vice chair to step down on Monday

WASHINGTON (Reuters) - The vice chairman of U.S. banking regulator the Federal Deposit Insurance Corporation (FDIC) will step down on Monday, ending his full six-year term, the FDIC said in a statement on Friday.

FDIC Vice Chair Thomas Hoenig testifies before the House Financial Services Committee hearing on "Examining How the Dodd-Frank Act Could Result in More Taxpayer-Funded Bailouts" on Capitol Hill in Washington June 26, 2013. REUTERS/Yuri Gripas

The departure of Thomas Hoenig could accelerate efforts to ease regulations on banks that were introduced following the 2007-2009 global financial crisis.

Hoenig, who was appointed to the regulator by former President Barack Obama in 2012, was widely expected to leave following the appointment of President Donald Trump’s pick to head the agency, Jelena McWilliams.

The FDIC, which oversees state-chartered banks, is one of three U.S. banking regulators responsible for implementing and enforcing rules that were introduced in the wake of the financial crisis.

Hoenig has opposed a move by Congress to loosen leverage and proprietary trading restrictions as part of a broader bill easing bank regulation passed by the Senate last month.

At a congressional hearing in January, Hoenig warned lawmakers the bill could encourage banks to take on excessive risk, jeopardizing the stability of the financial system - although he praised efforts to reduce the burden for small banks.

On Friday, he raised doubts about proposals being weighed by fellow regulators at the Federal Reserve and the Office of the Comptroller of the Currency that would permit further increases in bank leverage.

“These proposals have the laudable goals of simplifying bank capital rules and boosting lending to the real economy,” Hoenig wrote in a opinion piece he co-authored for the Wall Street Journal. But he added that he feared an unintended impact would be to make the financial system “less resilient” and crises “likelier and more severe.”

Lobbyists and other regulatory sources say efforts to ease such rules, in particular the so-called Volcker Rule banning banks from taking risky bets with their own money, have been slowed by the long time it has taken to install new leadership at the FDIC.

McWilliams was approved as the next FDIC chair by the Senate Banking Committee in February, replacing Martin Gruenberg, and is still awaiting approval by the full Senate.